Strategy is fun to talk about, and thanks to the media, something that everyone has both heard of, and is an expert on. (I’m looking at you, Sun Tsu lovers – “If you stand by the river long enough, you’ll see yet another ‘Art Of War’ quote float by.”) However, not every enterprise has an articulated strategy. And not every enterprise needs one.
Many new enterprises lack an articulated strategy. This does not mean they don’t have one — only that it is not being passed around in a presentation deck. An entrepreneur may be passionately focused on developing and delivering a great product, and if self-funded or otherwise not pressured to produce a strategy document, can go years without one. Years later, someone may write a case study that will be the closest thing the early enterprise will see to an actual articulated strategy, though even these can be both thorough yet wide of the mark. Many excellent case studies have been done on postwar Japanese enterprises such as Honda, Ito Yokado and others — all of which articulate a strategy that can mask what was actually going on. (I think Harvard Business School’s Honda A and B case studies best address the challenges involved in doing this.) I once asked the founder of Daiei, the late Isao Nakauchi, what his initial strategy was and sat back to hear the accumulated wisdom of the ages. He replied, “I needed to feed my family.” Not much of a venture capital raiser, that one, but it was the truth.
If you choose to acquire a firm with no articulated strategy, don’t assume they don’t have one. More importantly, be very careful that you don’t step into the false belief that their not having an articulated strategy is a great opportunity for you. This situation seems to overexcite many of my consulting colleagues, who convince themselves all they need to do is draft a strategy to round out the package and add tremendous value. Stop. Observe. And write down their actual strategy — not the strategy that you would like to see them have. There will be time for that later. Make certain you have a clear understanding of an acquisition opportunity’s actual strategy (regardless of what may, or may not, be written down in a strategy document).
Finally, keep in mind that strategy is important, but that it doesn’t “Fly the Plane.” Aviators have a good rule of thumb that I enjoy repeating: Aviate, Navigate, Communicate — in that order. All are important, but it is important to keep in mind that no one expects you to be checking your charts if you’re about to perform “controlled flight into terrain” a.k.a. crashing. Lou Gerstner famously said of a wobbly IBM upon taking over as C.E.O. “The last thing IBM needs is a vision.” Don’t overthink the strategy piece, and don’t let it get in the way of growing the business and making money. Some businesses need sales first, strategy later. Large companies seem particularly prone to this pitfall — because they typically have a strategic planning machine, there is an urge to saddle small acquisitions with a “strategy taskforce”, which frequently means you’ve just taken the only two guys who can fly your plane out of the cockpit to crack open their skulls for a bunch of newly-minted MBAs. This is not a crack at newly-minted MBA’s — it is directed at their bosses. Aviate, then navigate. And don’t overthink the navigation/strategy piece – if it won’t fit on the back of a beer coaster, or the message half of a picture postcard, it’s not a strategy.
Tags: Art of War, Strategy, Sun Tsu